India is expected to urgently roll out a food and health security package along with an energy security package and currency exchange to Sri Lanka, as well as spur Indian investment, officials told ET. During Rajapaksa’s visit it was agreed that the procedures to achieve these goals would be completed early and within a mutually agreed time. The food and health security package provides for the extension of a line of credit to cover imports of food, medicines and other essentials from India. The energy package would also include a line of credit for imports of fuel from India and an early modernization of the Trincomalee oil terminal. There is also an offer of a currency exchange to help Sri Lanka resolve its current balance of payments problems, officials said.
It was also decided to facilitate Indian investment in various sectors in Sri Lanka that would add to growth and jobs. Rajapaksa and Finance Minister Nirmala Sitharaman and Foreign Minister S. Jaishankar agreed to open direct lines of communication and to be in direct and regular contact with each other in order to coordinate the delivery of the package. “The discussions between the Sri Lankan Finance Minister, his Indian counterpart and the Foreign Minister focused on a whole range of issues of mutual importance in relation to bilateral relations, with particular reference to the aspect of economic cooperation. Both sides expressed their satisfaction with the development of the country. In the talks they identified ways and means by which the existing bilateral economic relations between the two countries could be further developed and deepened, “said a statement by the Lankan government.
Rajapaksa briefed the Indian side about the economic situation in Sri Lanka and his government’s approach to tackling the challenges after Covid. It was Finance Minister Rajapaksa’s first visit abroad since taking office in July this year. During the two-day visit, Rajapaksa had two rounds of joint conversations with Sitharaman and Jaishankar. He also met with Minister of Petroleum and Natural Gas Hardeep Singh Puri and National Security Advisor Ajit Kumar Doval. Sri Lanka, which was in an economic crisis after Covid and increased debt due to high borrowing from China, had turned to India about its ailing economy.
India recently saved Lanka with fertilizers for the island’s farmers after Chinese-made fertilizers were rejected for quality reasons.
Lanka’s oil bill rose 41.5% year over year to $ 2 billion in the first seven months of this year. The country is facing a severe foreign exchange crisis after the pandemic impacted the country’s tourism and remittance revenues.
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